Several central banks are loaning dollars to European banks that use the euro currency to prevent a return to a situation similar to 2008.

Participating in the three-month loan offers are the European Central Bank, the U.S. Federal Reserve, Bank of England, Bank of Japan and Switzerland's Central Bank.

News of the coordinated step caused global markets to go up. The Standard & Poor's 500 index in the U.S. closed up by 1.7 percent, while the German stock market closed up by 3.2 percent.

The announcement of the dollar loan was made at the European finance ministers meeting being held at Poland, which was attended by U.S. Treasury Secretary Timothy Geithner.

The loans will be done through swap lines and will carry a fixed interest rate. The Fed offered to lend dollars to help Europe contain the debt contagion. The deal would hold no real risk for the American central bank since it deals directly with the ECB and other European central banks.

With the loan, Europeans would not need to borrow from one another using overnight cash rates or seven-day dollar loan rates from the ECB.

While there was an agreement for the dollar loan, European finance ministers are not expected to agree to a collateral deal to pave the way for Greece's next $151 billion (&euro;109 billion), according to Finnish Finance Minister Jutta Urpilainen.

Finland insists on a collateral from Greece, such as shares in nationalized Greek banks or real estate. Germany added that in addressing the debt contagion crisis, the 17-nation eurozone must be guided by Europe's existing treaties.